Modigliani and Miller argued that a corporation's financial policies,such as hedging foreign exchange risk,________ unless they lowered the firm's taxes,affected its investment decisions,or could be done more cheaply than individual investors' transactions could be done.

Question

Quizplus · Accepted Answer

Modigliani and Miller proposed the theory of capital structure, which states that a firm's value is not affected by its financial policies if they do not lower the firm's taxes, affect its investment decisions or can be done more cheaply than individual investors' transactions can be done. Therefore, the answer is A - the financial policies do not change the value of the firm's assets.

Modigliani and Miller Argued That a Corporation's Financial Policies,such as Hedging